How to Maximize the Benefits of Word of Mouth?

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What do my customers really think about my products and services?

There are five major categories of approaches that companies can use to listen to their customers. Most highly successful companies employ several, if not all.

1. Customer-satisfaction Indices
   Surveying customers about their level of satisfaction and plotting the results can help managers understand just how satisfied or dissatisfied customers really are. The fact that such indices are quantitative makes them a useful tool for comparing results from different time periods, locations and business units.
2. Feedback
   To ensure early detection and quick resolution of mistakes, it is important to review the company's approach to soliciting and acting on customers' comments, complaints and questions.
3. Market Research
   It is absolutely critical to understand why a customer defects. Most customers will blame the price or some other basic product attribute to avoid discussing the real issue. Carefully questioning departing customers is important for two reasons: to isolate those attributes of the company's product or service that are causing customers to leave, and to make a last-ditch attempt to keep the customer. One company found that it recaptured a full 35 percent of its defectors just by contacting them and listening to them earnestly.
4. Front-line Personnel
   A company must train employees who have direct contact with customers to listen effectively and to make the first attempts at amends when customers have had bad experiences. The employees must also have access to processes to capture the information and pass it along to the rest of the company.
5. Strategic Activities
   Some companies go to extremes to involve the customer in every level of their business. For example, South-west Airlines actually invited frequent fliers to assist it in the first screening of flight attendants.

How important is word of mouth in consumer decisions?

A Thomson Lightstone/Marketing Magazine/Omnitel poll for the Canadian Congress of Advertising asked 2004 Canadians about information sources they rely on to make up their mind about which product to buy. The top source was "talking to friends, family and work colleagues," chosen by 67 percent. More than one quarter of respondents named five traditional media. Ian Lightstone, Director of Thompson Lightstone and Company of Toronto, says the survey shows "the importance of word-of-mouth and the reputation of a brand. It will have an impact in terms of consumer loyalty."

Ernest Dichter at the Institute for Motivational Research of Croton-on-Hudson, New York, believes that reliance on word-of-mouth varies with the economic and psychic risk involved. When the risk is high - in the choice of an automobile, for example, compared to the choice of a detergent -- word-of-mouth is possibly the strongest ally a product can have.

A study conducted by the White House Office of Consumer Affairs in the United States found that each unhappy customer will share their grievance with at least nine other people, and that 13 percent of unhappy customers will tell 20 people or more. Unfortunately, satisfied customers tell only half as many people (five other people, on average) of their positive experience. A marketer, therefore, needs two new satisfied customers for every dissatisfied customer just to maintain current status.

Table of Contents

1. Secure Customer Loyalty?
2. Maximize the benefits of Customer Feedback and Word of Mouth?
3. Address the needs of Dissatisfied Customers?
4. Profit from Customer Service Recovery?
5. Fulfill an Unconditional Service Guarantee?
6. Establish a Refund and Exchange Policy?
7. Adopt a Quality Management Program?
8. Entire Guide

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